Software has grown more important to organizations in every industry. As companies rely more heavily on software to support their core operations and mission, performance and user experience play an increasingly large role.

Our guest on this episode is Lewis Cirne, Founder and CEO of New Relic, which develops a cloud-based platform to manage application performance. Lew has served as Chief Executive Officer since February 2008 and as a member of New Relic's Board since February 2008. From 1998 to 2001, Mr. Cirne was Founder and Chief Executive Officer, and from 2001 to 2006, he was Chief Technology Officer, of Wily Technology, Inc. Prior to Wily Technology, Inc., Mr. Cirne held engineering positions at Apple Inc. and Hummingbird Ltd. Mr. Cirne holds an A.B. in Computer Science from Dartmouth College.

Transcript

Michael Krigsman:

(00:01) Welcome to episode number 148 of CXOTalk. I’m Michael Krigsman and today I have the distinct pleasure and honor of speaking with Lew Cirne, who is the founder and the CEO of application performance management software company New Relic. Lew how are you?

Lew Cirne:

(00:27) I’m very well and happy holidays to you and thank you for having me on the program.

Michael Krigsman:

(00:32) Well it’s just great that you can join us today and you know let’s start by give us very briefly a sense of your background. How did you come to found the company?

Lew Cirne:

(00:49) Well you know my background as it relates to the company and my professional life really has to go all the way back to when I was 12 years old right around this time of year in 1982 when I got my first computer. In fact it’s sitting right over- just right next to me in my office. It was a VIC-20 and that Christmas I discovered that you know I had found the joy in my life or a primary joy in my life which is software and building you know this incredible capability great new things in software. So I’ve been doing that now ever since then, and really that joy of what can be done in software to have an impact in the world drives a lot of what we do at New Relic, because our mission is to help make software great. I think there’s an art to great software, but there’s also a science to it.

(01:40) New Relic provides the science, science is all about measuring things and then taking those measurements to make better decisions. We measure an enormous number of software applications at very deep levels for about 12,000 customers today and we do it in real time basis through our software Linux cloud. So that’s a little bit about how we got here and why it matters to us at New Relic.

Michael Krigsman:

(02:03) Okay and speaking of great software it is not broadcasting, so bear with me a moment. I use Google Hangouts and are we broadcasting folks, somebody answer me on Twitter.

(02:40) So apparently we are broadcasting there was a delayed reaction. You know, speaking of great software, when you use free services like Google Hangout you’re kind of at their mercy, but you were saying you founded the company and you have about 12,000 customers.

Lew Cirne:

(03:02) Yes, so and what we do for our customers is we measure everything that’s going on in their software, what the end-user is doing in that software to address three interrelated and important questions. And the first is we measure and help our customers understand how healthy is the application; is it running, is it fast, is it available, is it predictable.

(03:27) The second question is what is the customer experience. What is the end-user experience? Is it a good experience, is it improving, how many people are using your software, and how does that compare with historical trends.

(03:41) And then the third level of all of this is the business outcome. You know the whole reason why companies build software projects is to achieve some business outcome, and so tying the visibility of the business outcome, if you’re e-commerce that might be how much you’re selling right now, or if you’re a SaaS company it might be how many people are using your SaaS product.

(04:00) Tying that data all the way down to the customer experience and the application health, tying that altogether is super important and we’re the only company that does it and we do it with a cloud platform.

Michael Krigsman:

(04:11) So that’s quite interesting this notion of both the user experience and the business outcomes, you’re a very technical company so explain the linkage between what you’re doing and the user experience and the business outcomes.

Lew Cirne:

(04:27) Well think about it this way, in 2015 software is becoming a de facto way in which a company connects with its customer. You know in the past, you know people might interact with

Michael Krigsman:

(00:01) Welcome to episode number 148 of CXOTalk. I’m Michael Krigsman and today I have the distinct pleasure and honor of speaking with Lew Cirne, who is the founder and the CEO of application performance management software company New Relic. Lew how are you?

Lew Cirne:

(00:27) I’m very well and happy holidays to you and thank you for having me on the program.

Michael Krigsman:

(00:32) Well it’s just great that you can join us today and you know let’s start by give us very briefly a sense of your background. How did you come to found the company?

Lew Cirne:

(00:49) Well you know my background as it relates to the company and my professional life really has to go all the way back to when I was 12 years old right around this time of year in 1982 when I got my first computer. In fact it’s sitting right over- just right next to me in my office. It was a VIC-20 and that Christmas I discovered that you know I had found the joy in my life or a primary joy in my life which is software and building you know this incredible capability great new things in software. So I’ve been doing that now ever since then, and really that joy of what can be done in software to have an impact in the world drives a lot of what we do at New Relic, because our mission is to help make software great. I think there’s an art to great software, but there’s also a science to it.

(01:40) New Relic provides the science, science is all about measuring things and then taking those measurements to make better decisions. We measure an enormous number of software applications at very deep levels for about 12,000 customers today and we do it in real time basis through our software Linux cloud. So that’s a little bit about how we got here and why it matters to us at New Relic.

Michael Krigsman:

(02:03) Okay and speaking of great software it is not broadcasting, so bear with me a moment. I use Google Hangouts and are we broadcasting folks, somebody answer me on Twitter.

(02:40) So apparently we are broadcasting there was a delayed reaction. You know, speaking of great software, when you use free services like Google Hangout you’re kind of at their mercy, but you were saying you founded the company and you have about 12,000 customers.

Lew Cirne:

(03:02) Yes, so and what we do for our customers is we measure everything that’s going on in their software, what the end-user is doing in that software to address three interrelated and important questions. And the first is we measure and help our customers understand how healthy is the application; is it running, is it fast, is it available, is it predictable.

(03:27) The second question is what is the customer experience. What is the end-user experience? Is it a good experience, is it improving, how many people are using your software, and how does that compare with historical trends.

(03:41) And then the third level of all of this is the business outcome. You know the whole reason why companies build software projects is to achieve some business outcome, and so tying the visibility of the business outcome, if you’re e-commerce that might be how much you’re selling right now, or if you’re a SaaS company it might be how many people are using your SaaS product.

(04:00) Tying that data all the way down to the customer experience and the application health, tying that altogether is super important and we’re the only company that does it and we do it with a cloud platform.

Michael Krigsman:

(04:11) So that’s quite interesting this notion of both the user experience and the business outcomes, you’re a very technical company so explain the linkage between what you’re doing and the user experience and the business outcomes.

Lew Cirne:

(04:27) Well think about it this way, in 2015 software is becoming a de facto way in which a company connects with its customer. You know in the past, you know people might interact with their bank in the physical world by walking into a physical branch. But today the way most people interact with their bank is through software through the phone and their app.

(04:52) So if you’re in business and want to stay connected to your customer, you need to measure what the customer is doing in your software and because that is your connection to your customer and therefore the data that you need to grow your business. So what we started out with is just measuring the transactions flowing through that software. The transactions could be a request to log in or to look up your balance, or to purchase an item on an e-commerce site.

(05:21) We’re measuring how fast that was, but then we realized if we could build this big data platform on the data we’re collecting where we threw away nothing, and we could also go to a specific customer of a subset of customers and see exactly what they were doing to answer business question essentially with the same data in real time. And combining those two is powerful and unprecedented.

Michael Krigsman:

(05:44) So you’re making this link between metrics and guarding the technical performance of the applications and the software with the actual business results.

Lew Cirne:

(05:56) That’s right and a very strong correlation between the two. There've been many studies showing that a slow or buggy site will result in much poorer business results than a fast and highly reliable site.

(06:13) And so as a great before and after example one broadly documented success story is how New Relic was brought in late 2013 to help fix healthcare dot gov, where as you recall back then that was you know in a very challenged state when it first launched. There was inadequate visibility into why there were problems with the site.

(06:39) And New Relic was brought in after the President declared a tech surge and we were installed into Healthcare dot gov and literally almost instantly there was visibility available to hundreds of people that could use our cloud service to figure out what was wrong and what was working. And that could help them turn that project around and quickly came to a point where they were servicing the needs of you know, all of these millions of Americans so they could get healthcare.

Michael Krigsman:

(07:07) Now what about the user experience aspects, so you’ve linked what you do to the business results but what about user experience, why does that matter and whose user experience are you talking about.

Lew Cirne:

(07:18) That’s a great question, I mean at the end of the day if people aren’t enjoying using your software then they’re not going to use it, and if people don’t use your software then your projects almost certainly going to fail.

(07:35) So when we talk about measuring the user experience, what we mean is instrumenting not only the software on the back-end on the server that can generate images or data for a mobile app, but we actually have products that go into the iOS on the Android app and measure how good is that experience from the end-users perspective. We also do that in the browser so we can see exactly how good the page loads for our customers to.

(07:59) And we can slice and dice that in a variety of ways and we can tell you if it’s a better user experience on you know, how much better is the experience on Wi-Fi for our mobile customers versus various specific carriers. We can also break it up by geography or by class of customer because here’s a common problem that we see is especially on a lot of enterprise applications.

(08:22) The biggest customers often have the highest workloads or the largest amount of data stored in the application. So you’ve got this paradox where your biggest customers can often have the worst customer experience. And so measuring your customer experience by specific customer and segmenting out your highest spending customers is a great example of the kind of visibility that you need to have to make sure you’re delivering business results.

Michael Krigsman:

(8:48) So this is a technical discussion then or a business discussion.

Lew Cirne:

(08:54) Well we usually start as a technical discussion because we have about 500,000 people that have used our product and most of them are developers or DevOp people, and so that’s how we enter the account. We think of it as three layers of maturity starting with like the health of the software and developers care about the health of the software that they write. Then they more into operations who are responsible for keeping that running.

(09:20) That’s the kind of the first stage of that application health. Then we move up to the customer experience and that may go up to the application owner, who is responsible for delivering your customer experience, the business user or the product manager.

(09:33) Then ultimately that whole project has business results attached to it so we can actually go from there to the more senior executive. And making sure all those four constituents are well aligned and looking at the same data to make sure that they’re making good decisions together, that’s what we uniquely provide.

Michael Krigsman:

(09:51) You know one of the things I found interesting as I was preparing for our conversation, is you speak about the company as an analytics company as opposed to a software performance company.

Lew Cirne:

(10:06) Yeah, well you know this is my second company in and around this general space. I founded a company called Wily Technology in 1998, and when Wily was created there was no category called APM. Wily is credited with creating that whole category and that’s now a multi-billion dollar market and many players in the market. And many people think of New Relic as an APM company.

(10:33) So I founded Wily and ultimately sold it in 2006 and after selling the company I thought to myself, learning everything I had about APM and about software and about business what would I do if I was to do it again and a lot of that thinking came to New Relic and I came to a few conclusions.

(10:53) One was first of all we have to be all-in the clouds. SaaS delivery is the only way to attack this problem. It gives us a fundamental advantage and it’s a far better experience for our customers. So we decided to be the only pure play SaaS company and we’re the only pure play SaaS company in this space.

(11:12) So the second conclusion I had was I’d always felt like APM is this incredibly powerful and important must-have technology and you know I had experience creating that market, but it was always a step to something even more important. Right, the whole reason why we built software in business is to achieve some business results, and the more important that the software is to the business, the more important to see what’s going on in the software from a business perspective in real-time.

(11:40) So it’s rare when you get an opportunity to revisit a similar problem with a clean sheet of paper, and that’s what New Relic was and that’s one of the reasons why I think this company has turned out to have far more impact than my previous company.

Michael Krigsman:

(11:52) But how do you get business users to actually care about what’s essentially software development metrics.

Lew Cirne:

(12:03) Well it’s more than software development metrics, so as CEO of New Relic and I have a development background but I’m going to talk about my business head. I use our analytics to answer business questions continually. The kinds of questions I answer could be of all the 12,000 customers that use our product how many of them have more than 50 or 100 active users and who are those companies. Because I want to see where is New Relic broadly adopted within a customer right.

(12:35) So I can do that. I can segment that by country, I can segment that with how much customers spend with us. I can segment that by city. Last Fall I was going to Dublin to visits the New Relic European headquarters there and I had a few hours available on my schedule, so I did an instant query on our product to say who are our most active customers in Dublin, found a very recognizable name as one of our customers and was able to spend time with the customer. You know, that had an immediate business impact. In fact, we closed business based on that data shortly after my visit.

(13:12) Had I not had that data in front of me I might of like spent my time with the wrong account. Now what I can also tie it to though on the technical side is, is that customer having a good experience using our software, are they having troubles. So when I go and visit that customer I know whether or not it’s going to be an easy conversation they’re having using our product or if we have some you know issues we need to address. So that’s why you need both the business and the technical data together.

Michael Krigsman:

(13:41) So you’re collecting the data from individual customer, you’re aggregating that data which of course tells you a story about that customer and their experience, but you’re also aggregating data across the range of your customers. So what are the kinds of trends or learnings that you take away from that aggregated cross customer data?

Lew Cirne:

(14:06) Well what we’re seeing in our customer data is a couple of trends that are irrefutable now but we saw it early and is important to product strategy and that’s why I think we have such a lead in the market. We saw it early in how rapidly our customers were moving to cloud computing. And so for example at New Relic over half of our customers have at least some presence in AWS that they are using New Relic to monitor the workloads.

(14:30) We have far more customers using public cloud, using New Relic for public cloud than any other APM provider by a long shot. So that informed our product roadmap decision so we introduced new functionality specific for AWS last October that has had an enormous level of interest with our customers and even improves our value in prop in the cloud environment like AWS.

(15:00) The other trend we’re seeing is the migration from single language to multi-language and from monolithic to micro services. so if I look at the applications from about a decade ago, you might have one or two tiers where lots of code all went into you know a single large monolithic web application or web service. Now with micro services you have a lot more flexibility with your teams where you can have smaller teams doing you know smaller services that are interdependent in more complex ways.

(15:32) And those services are often implemented in different languages depending on the nature of the challenge for that service. So in New Relics own environment for example we have Node, Go[lang], Ruby), Java all interconnected in our production environment and we see that in our customers environment too. Why that matters is that New Relic is the only company that has more coverage of more languages than any other companies with Python and Node and all these other modern programing languages, so as companies address more and more technologies to build out the production environment we’ve got the data to show what we need to cover next and we do a good job of doing that.

Michael Krigsman:

(16:09) So what are the business implications of these development trends that you were just describing.

Lew Cirne:

(16:14) Well I mean the reason why people are doing this is all about agility, time to market and a great customer experience. You go back to what I was saying before that you know, if you’re a modern bank for example, I think the quality of your Android and iPhone app is equally important to the customer experience to the branches themselves. I would dare say it impacts the customer experience more than the physical branches especially younger customers.

(16:54) So how do modern enterprises deliver the very best customer experience? Well they’ve got to be agile and nimble and they can’t be spending their time addressing problems that other people are expert at. And so where there are some problems they don’t have time to address, well building data centers, building their own monitoring tools, standing up on premise technologies to monitor their application. That’s all wasted time and energy that could be built into developing a great customer experience.

(17:24) And so that’s why we see I think this move to DevOps where that helps software projects iterate faster and automate more, and it’s also why there’s a need to sort of see into the software in a real-time basis because a problem in the software is a problem in your business now.

Michael Krigsman:

(17:45) What about mobile, what is your data telling you about mobile and mobile trends.

Lew Cirne:

(17:51) What we’re seeing in mobile is that it reminds me of the APM market about 12/13 years ago, where we’re now getting to the stage where companies have had enough time you know and experience with their mobile projects to realize the importance to delivering a great customer experience. It’s not just about measuring how many people use my app. It’s measuring how responsive is the app, how many errors are in the app, how does that vary by geography or by version, and do I have problems in how my app behaves.

(18:29) Because if an app is slow, and let’s say for example you’ve got an automatic payment app where you’re a retailer and you want people to use your automatic payment app. But it takes 10 or 15 seconds for that app to spin up, people aren’t going to do it. they’re going to try it twice and then they’re never going to revisit right.

(18:49) So what we’re seeing now is companies recognizing that they need to see inside the mobile app in the way they see into their server. And the reason why this reminds me of in the very early 2000s was until recently most mobile apps were developed by third parties who were expert in building iOS and Android applications and after that outsourcing maybe it’s brought back in-house. Whereas this becomes more of a core competency of the enterprise where like your mobile app is your front door for the world and that has to be brought in-house. That expertise has to be brought in-house, and when things are brought in-house you’ve got to own the success of the project. That’s where there’s more of an investment in tools like New Relic Mobile to make sure it delivers great customer experience.

Michael Krigsman:

(19:31) So is it the business people who are driving these concerns about performance and user experience and whether users will drop off because the performance isn’t there or is it the development folks.

Lew Cirne:

(19:45) The issues with business people is that it’s such a broad term; the role is not clear enough. So we think of it as the application owner, the person who is responsible for the success of the project and that usually includes project management development and maybe marketing right. but it’s the person who determines what is the app going to do and what are the key metrics to make it successful.

(20:10) And so those are the people that are insisting on a great customer experience. They know the importance of an app that’s stable, so you know they’ll listen to their developers who’ll recommend New Relic to make sure that they’ve got the data that they need to be successful, and they love also seeing the higher level KPIs that we can deliver for them in real-time.

Michael Krigsman:

(20:29) So really it’s a mixture going across you said product management and development and marketing, so it’s both the development people and the people on the ‘nebulous business side’.

Lew Cirne:

(20:41) Right, and the closest specific role I’d say is product management and then followed by the application owner which could be a General Manager depending or Chief Digital Officer. It varies by project depending on the nature of the project, but it’s the person on the hook of the success of the whole software project.

Michael Krigsman:

(21:01) Which ultimately I suppose most of the time would be a business person.

Lew Cirne:

(21:06) Like if it’s a small company it’s the CEO, if you’re a SaaS company it’s the CEO, right. if it’s a digital project in a large enterprise it could be the Chief Digital Officer or it might be the General Manager for that project.

Michael Krigsman:

(21:23) Do your customers tend to be more innovative companies? And the reason I ask is because for many established companies it’s difficult to get strong communication across departments with sharing information and the collaboration that you’re describing.

Lew Cirne:

(21:41) Our customers do tend to have an innovative mindset and that mindset exists to varying degrees in almost every company. Sometimes it at the core of the whole company and the core company has bought into, and it could be enormous enterprises that are entirely bought into public cloud to SaaS and to agility.

(22:04) Other companies that’s less ingrained to the thinking at this point, so they’re a little more cautious with adopting things like cloud. But then we see in business units or modern digital projects they’re all in on cloud, because I don’t think there is a business you can find today that doesn’t have some level of investment or very few that don’t have some investment in cloud technologies.

(22:26) So it’s more of a mindset, but I think of it this way that there is a mindset of playing offense with software versus playing defense with software. When I use that term I mean playing defense with software is thinking about software as a cost reduction tool to automate existing processes. So software can be used for that. It has been used for that for decades, making payroll a little more faster and a little more predictable; that’s great defense for software.

(22:55) Playing offense with software is going to the topline for your whole company. It’s changing the customer experience in how they integrate with your company. Your company can take share, and that mindset tends to really love what what New Relic offers, because our platform integrates with all of the data I’ve just been talking about.

Michael Krigsman:

(23:09) So New Relic is not just about driving efficiencies in the software development process but it’s actually about providing a product advantage so to speak.

Lew Cirne:

(23:23) That’s exactly right and of course we help on the efficiency side too, we have many customers as I say where I’ve reduced my hosting bill or my infrastructure costs dramatically because New Relic told me how to gain efficiency. But if we just stop there while that does offer value to our customers then we feel like we’ve not delivered on our full potential. And our full potential is to help companies rebuild their topline.

Michael Krigsman:

(23:48) In a way this is implied by the things you just said, but how are you different from a traditional enterprise software company put it that way.

Lew Cirne:

(23:59) I’d say the most fundamental difference I think of New Relic is we are a product-first company, we’re a product driven company and so we care immensely about ease of use and design, and time-to-value of our product. And we want our product to be so compelling that we’re drawn into large and larger opportunities and our business grows in that natural effect of having the product the people love to use.

(24:29) I’d say that’s been at the core of our success to date and we continue to grow at a rapid rate largely because people love our product and they tell their friends about it. And so honestly, a lot of traditional enterprise software companies I think they’ve lost that; the previous ones in generation ones in particular especially in and around the kind of traditional IT management space.

(24:51) And so you know if you look outside my office and I’m in my office right now and if I were to walk 10 feet that way the lead designer for the company is right there. That’s the person closest to my office than anyone else and so that’s because we care so much about having products people love to use.

(25:11) And I think that in the modern era with the cloud where people can try our products even before they have a sales engagement or they certainly talk to their colleagues a lot. There’s a lot more transparency now than there was 10 or 15 years ago where you had to rely on maybe what a salesperson told you or you know, a lot of uncertainty about how the product experience would be and you had to make the product decision in advance on that and take a lot of risk on that.

(25:43) So we think in the modern era, the decisions made while you evaluate the software and the experience you have in using the software has a huge impact on that, and that’s why we’re growing at a rate far faster than our market.

Michael Krigsman:

(26:02) You know that’s really interesting what you said that the lead product designer sits 15 feet from your office. The only other company where a larger company as opposed to a startup company you know are more or less in the same room, a company of where I’ve heard of that happening is Infor, where they’re an older established company, but Charles Philips their CEO is trying to change their culture. And their designers, they created an in-house design department and that design department is the closest group to his office.

Lew Cirne:

(26:37) Interesting, wow yeah, I think it’s super important. I mean I think of myself as a very passionate product person and I think different CEOs have different areas of focus based on their skillset and interest and they hire remarkably if you want to be successful as a CEO, you want to hire remarkably talented people to cover for your weaknesses. So I’ve got a remarkably capable President who was the President of sales at Salesforce and has forgotten more than I’ll ever learn about growing a business and being successful in the field.

(27:12) And so it’s not that I don’t love visiting customers but it’s not my strength to you know run the sales organization but I’m very passionate about the product. And so I spend a lot of time not only with the lead designer but with engineers, and occasionally I try to go away and I call it coding retreats; four or six times a year I’ll go to a remote location to build something or experiment or prototype, and those coding retreats have often turned into new innovations that have turned into new products and new opportunities for us.

Michael Krigsman:

(27:43) So you’re obviously very hands-on and very focused on the product. How do you create a culture inside the company that respects that set of values?

Lew Cirne:

(27:58) Well I think it comes pretty naturally when you know if your founder CEO is very deep into the product then that tends to drive the culture that’s a little different from a CEO who spends all the time looking at the pipeline, and you know there are many different ways to make a business successful. We like to think of it as you know the business can’t succeed without great sales and great revenue growth and all of those sorts of things. But great sales and great revenue growth at our company ought to be a natural extension of a great product that is a joy to sell.

Michael Krigsman:

(28:36) That again is interesting, you’re a public company, so one would think, well you know you’re focused more than anything on the numbers and yet you’re saying your focus is – go ahead.

Lew Cirne:

(28:51) I mean the numbers are super important. They are but I forget exactly the quote that Jeff Bezos said, something along the lines of "if we just report a good quarter it’s reflective of great decisions we made (I don’t know) six quarters ago." So the better a job we do in making a great product that people love and tell their friends about, and a better job we do on all parts of our company like thinking about our financial model. Thinking about how we efficiently scale the go-to-market organization. Thinking about how we deliver the right message to our constituents in an effective way that differentiates our brand.

(29:25) I mean if we do all that work then it’s a more natural motion for us to deliver the business. Also that thinking is fundamental into how we funded the company on a business model. We’re a 100% subscription business. All the selling we do right now is for future revenues right, and so that has a much higher level of predictability than in a company that lives or dies by the traditional license and maintenance model.

(29:53) Of course that’s hardly unique today, there’s a lot of excitement about SaaS delivery models. But I would say that when I founded the company this wasn’t and decided on this model, it wasn’t because I read about it on a hot blog, it was because I had lived the traditional license and maintenance you know horror story before, where basically you lived and died by a handful of deals in the last few days of the quarter and that drove the whole company, and pretty soon you forgot about product integrity.

(30:19) So we decided to build a business model and company that’s well suited to us staying true to our north star of great products, and can still be effective as a public company and so far it’s been working.

Michael Krigsman:

(30:33) So what does this mean then for the different as CEO, the difference between on premise model versus the subscription model in the cloud mindset. I don’t mean financially but from a culture standpoint, what does this mean for your strategy and how you actually run the company.

Lew Cirne:

(30:59) Well we fundamentally believe that being all in on cloud is a long term strategic advantage for us and for a few ways. One you know of course our customers get you know continual improvement in their software on a regular basis and you know, the New Relic that customers use today is better than the New Relic that they used last week.

(31:23) We don’t have to invest in you know precious resources, our precious technical and prog resources and support on old versions of the software. Right, that can be an enormous drain especially if you go to scale.

(31:39) But what’s really exciting to me as a cloud company is what we can do with all this data that we’re collecting that you can’t really do as an on-premise company. Let me give you some context.

(31:49) We collect about 3 million software analytic events every second into our cloud. That’s more than a hundred times the tweet volume that’s going on in the entire world right now just as context. And we’re able to analyze it all in real time. Our customers are continually querying these events in real time, and I regularly see our software analytics cloud querying billions of events per second for our customers.

(32:20) So this data that is coming from the inside of the software we can and should do more and more things to be smarter about the analysis of that data. Not only, you know, the history of our space has been presenting charts of this data to help a human kind of figure out problems. And there have been a few companies that have talk about, well what if I can do ‘autonomic computing’ or an intelligent approach where they you don't have a human to look at the charts to figure out the problems, you figure out the problems yourself.

(32:52) The problem is none of it's ever really worked because the technologies have been on premise. You must experiment with your algorithms to see whether your algorithms are any good. In order to do that you need a ton of data to run the experiment on and only New Relic has this mass of data.

(33:10) I believe our launch on this opportunity is having a smarter and smarter cloud that it creates more and more incentives for our customers to put more data into our cloud and it has this remarkable flywheel effect.

Michael Krigsman:

(33:23) As you collect this data where do you envision the company going, how will you use this data to benefit your customers.

Lew Cirne:

(33:35) Customers are very pressed for time. They’re overwhelmed by an incredibly deep backlog of things to do. You know it’s not easy to run a production operation environment today where the stakes are so high and the cost of downtime is so high and there is so much stuff to monitor and so much stuff to watch. In fact, more than a human can watch.

(33:55) So we want to put more and more smarts into our cloud to reduce the amount of effort an operation person needs to do to keep the site running. And the only way I think to do that in a really effective higher quality way is to have an enormous amount of real data about what real customers are doing, about what real applications are doing, so that when you build your algorithms those algorithms have the data to upon which to assess their effectiveness and improve on a continual basis.

(34:23) It’s kind of like, could you imagine - you know Google search just gets better and better on a continual basis because they can see how effective their searches are on the whole of the Internet right now and then improve on it. You know if Google search was like an on premise compliance there’s no way that they could improve it in a continual way the same way, so that’s kind of the analogy that I think of.

Michael Krigsman:

(34:43) Are there specific examples you can think of where having this massive set of data will apply directly to customer’s problems, provide customer solutions.

Lew Cirne:

(34:57) We’re hard at work at various specific examples of that right now that it’s a little premature for me to share the details, but suffice to say that we’ve got very bright days ahead for New Relic as we continue to innovate in this space.

Michael Krigsman:

(35:15) We have just about 10 minutes left. What advice do you have for IT departments in this whole mix and CIOs who are just facing enormous change in the environment?

Lew Cirne:

(35:32) You know my advice first of all is I have empathy is an enormous amount of change and you know IT professionals have invested an awful lot of time and energy to become expert at delivering great service and quality in an approach that you know is going under an immense change right now.

(35:56) So you have to rethink a lot of things on how are you going to continue to succeed in a world that demands a much higher level of agility and a much quicker time to market a much higher level of availability than just a few years past.

(36:13) It’s unquestionably true that everyone is moving so many workloads to public cloud, that has to be a big part of your strategy and it is a big part of strategy for IT departments and companies of virtually every size.

(36:27) So my advice to all of you is to see this as an opportunity to learn and grow, and think about how do you reduce the risk of migrating workloads to the cloud. How do you increase the likelihood that this will deliver a more better experience, a more secure experience, a higher performance experience for your customers than it has in the past in a traditional hosting environment.

(36:56) And then think about what’s the whole purpose of these projects anyway. There’s a business purpose for every project. You don’t fund 10, 20 or 100 developers on a project without having business goals. So there’s been talk about aligning teams with the business forever. Right, the way you align IT with the business I think, is you measure the health of the software and then express it in business terms on all of the same platforms, so you connect the business outcomes with the health of the software. And that’s where I think we can offer a great deal of help for companies that are wanting to move into the cloud.

Michael Krigsman:

(37:31) The measure the health of the software and express it in business terms. That seems like a really key point, maybe just elaborate on that.

Lew Cirne:

(37:40) Sure, it could be something as simple as we have an elevated error rate on a mid-level service okay, that is a technical term that would mean almost nothing to the line of business exec. But if I said, you know 6% of our customers are seeing errors when they try to add an item to a cart, that’s a business outcome because it’s talking in terms of people and it’s talking about what the function is trying to do and you can pretty quickly get a sense of what is the business impact of that problem. And that’s a very different problem from you know 0.1% of our customers are having a trouble updating their change of address form.

(38:21) And so if I’ve got to prioritize my work, now I’ve got this business impact to help prioritize my work and certainly, is a more valuable way to report up the chain. And of course, let’s think about the positive case like, since we improved the performance of add to cart, we’ve seen a 6% increase in the number of people that have added items to the cart and that has resulted in you know a higher level of revenue which New Relic Insights could also measure in real-time, so that our revenues are up over 2% in the last two weeks and that correlates with the improvement and performance. Those are the types of things we can do.

Michael Krigsman:

(39:07) So a key point then is express the technical context in business terms that the marketing manager, the product manager would care about for example.

Lew Cirne:

(39:24) You know yes, every stakeholder has a slightly different language or a slightly different view into what’s important to them. And so being able to present you know elevated error rate on this particular servlet and service on this server, that’s handy to an ops person, a DevOps person and developer so we speak that language.

(39:45) But then with New Relic Insights we can also speak the language of the technical support manager or the line of business manager or the marketer and it’s all based on the same data.

Michael Krigsman:

(39:55) And then I assume really you could have applied the same lesson that you were describing for IT. you could apply the same lesson to developers who want to make an effort to try and bridge the gap that they have with their business stakeholders.

Lew Cirne:

(40:12) Absolutely and you know one of the things I’ve learned is that the better a developer is able to empathize with the customer and the experience they're having, the better your products. And so if the developer knows that the code they’re writing is turning into a really poor experience or is being used in a different way than what they expected that helps them better empathize with the customer experience and it usually turns into better products.

Michael Krigsman:

(40:38) It’s really interesting so empathy for the user is shall we say a key success factor for writing the best software products.

Lew Cirne:

(40:48) I think that’s true for virtually every function. I mean in a way it’s just one of those business truisms right. If your company can really empathize with your customer you’re going to do a better job solving their problems.

(41:01) I mean there are some airlines when I fly where I feel like that’s in the culture of the airline. There’s some airlines where I don’t feel like they have any empathy. It’s almost like they’re (unclear 41:10) and flown their own airline. So you know it’s not specific to developers in general but it’s like if you can connect every stakeholder to the end customer then you’re going to have a better customer experience, and the customer experience is going through software, that software is measured by New Relic, that’s why we matter.

Michael Krigsman:

(41:30) And this is obviously a point which you feel very strongly or passionate, so how do you ensure that your organization at New Relic is filled with people who have that empathy and again have the culture of having that as a goal.

Lew Cirne:

(41:50) You know, we do obsess pretty hard on building a culture that creates an environment where people love – I use the term ‘loving your Monday’s’ so people see work not as this means to an end, but actually is an integral part of the joy or a big part source of joy in their life. It comes down to two things.

(42:17) I think the first factor is everyone in the company no matter what your role, no matter how junior or senior everyone needs to matter and needs to feel like they matter and what they do matters, and what they do is contributing and challenging and is helping the grow. That’s the first thing.

(42:35) And the second thing is you must do your work with people, who bring out the best in you, who encourage you, who give you energy right, who want to make you do your best and want to deliver great outcomes because there are other people on this journey with you who want to make successful just as much as your own success.

(42:35) And so if those two things are happening then I think we’ve got a culture that help us withstand tough times and helps us excel in good times and that’s the hallmark of great companies. So we are very thoughtful about this and of course you know, the culture is so much more important to our company’s success than any other factor including technology. But of course, we eat our own dog food and every function in our company at New Relic Insights is to connect our employees to our customers.

Michael Krigsman:

(43:21) You know we only have just a minute left and we haven’t really spoken about being an entrepreneur and being a company founder but just one final question, what distilled essential advice would you have for entrepreneurs and founders. You founded a company and then sold it, you founded a second company in New Relic and you’ve taken it public. What is your distilled wisdom for entrepreneurs?

Lew Cirne:

(43:48) Well in one minute or less the most important lessons I’ve ever learned in my book, in both my companies have been about myself. I feel like self-awareness is without question the most important skill necessary to continue to grow and succeed and lead in a company and just grow and succeed in any function.

(44:09) So basically what I tell entrepreneurs when they think about starting a company I say you know I have no idea whether the idea will succeed. There’s a lot of risk in all start-ups but I guarantee you that if you give it your all you’re going to learn an immense amount about yourself and that is of incredible value.

(44:27) So what I learned about myself from my journey at Wily helped inform my thinking in how I would lead New Relic and the team I needed to bring along on with me on the journey and how I would fit inside that team. So that’s how I distil it down and you know I’m not done with learning about myself that’s for sure.

Michael Krigsman:

(44:44) So self-awareness and the corollary would be insight are the most important things.

Lew Cirne:

(44:51) Yes.

Michael Krigsman:

(44:52) Great well unfortunately we’ve run out of time and I think there’s a lot more we could talk about. Thank you for taking the time to speak with us today Lew

Lew Cirne:

(45:01) It’s a pleasure thank you very much. Happy holidays.

Michael Krigsman:

(45:02) we have been speaking on episode number 148 with Lew Cirne, who is the founder and the CEO of New Relic. Lew again, thank you very much I really appreciate you taking the time.

Lew Cirne:

(45:20) Thank you

Michael Krigsman:

(45:20) And everybody, thank you for watching. Next week there’s no CXOTalk because it’s Christmas and we’ll be back in two weeks and we have amazing guests lined up for January ,and February and into March so come back and I hope everybody has a great holiday and we will see you in two weeks, thank you and bye bye.

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